TRUMP IS NOT A SELF-MADE BILLIONAIRE

…Donald Trump with his father Fred Trump

Trump’s story of starting his company with a $1 million dollar loan from his dad is a farce.

Donald Trump built his TRUMP business empire, and he won the presidency by proclaiming himself a self-made billionaire.  He has always insisted that his father, the New York City builder Fred Trump, provided almost no financial help. “I built what I built myself,” the president has repeatedly said.

But the New York Times has accumulated over 100,000 pages and documents and has been researching Trump’s empire for over a year and they have determined that as most of what Trump says is totally false, so is his story of being a self-made billionaire.

The results are that not only that he is not a very good business man, he is also not that smart and if his father and he hadn’t committed fraud and tax evasion, he would be considered a total failure.  Why do you think he will never lets anyone see his tax returns?

Here is the actual statement from the New York Times:

 “Donald Trump received the equivalent today of at least $413 million from his father’s real estate empire. What’s more, much of this money came to Mr. Trump through dubious tax schemes he participated in during the 1990s, including instances of outright fraud.”

The president’s parents transferred well over $1 billion in wealth to their children, much of it to Donald, which could have produced a tax bill of at least $550 million under the 55% tax rate on gifts and inheritances that was in place at the time. Helped by a variety of tax dodges, the Trumps paid $52.2 million, or about 5%, the tax returns show.

The president has declined requests for many weeks to comment on this article before it was eventually published.  Of course, Trump’s lawyers say it’s not true, but the facts and documents don’t lie.

Here is what Trump’s lawyer says: “Mr. Charles J. Harder, Trump’s lawyer provided this statement. “There was no fraud or tax evasion by anyone. The facts upon which The Times bases its false allegations are extremely inaccurate,” he said. “President Trump had virtually no involvement whatsoever with these matters,” he continued, saying the president had delegated those tasks to relatives and tax professionals. “The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.”

In a statement on behalf of the Trump family, the president’s brother, Robert Trump, said, “All appropriate gift and estate tax returns were filed, and the required taxes were paid.”

Here are the take-aways from the Times investigations:

·       The Trumps’ tax maneuvers show a pattern of deception, tax experts say

The line between legal tax avoidance and illegal tax evasion is very murky, and there is no shortage of clever tax-avoidance tricks that have been blessed by either the courts or the IRS itself; “the wealthiest Americans rarely pay anything close to full freight. The Trumps’ tax maneuvers met with little resistance from the IRS,” The Times found.

·       Donald Trump began reaping wealth from his father’s real estate empire as a toddler

In Donald Trump’s version of how he got rich, he was the master deal-maker who broke free from his father’s “tiny” Brooklyn and Queens real estate operation and built a $10 billion empire that would slap the Trump name on hotels, high-rises, casinos and golf courses the world over.  In every era of Mr. Trump’s life, his finances were deeply entwined with, and dependent on, his father’s wealth. By age 3, he was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. In his 40s and 50s, he was receiving more than $5 million a year from his father.

·       That ‘small loan’ of $1 million from his father that Trump mentions was actually at least $60.7 million — much of it never repaid

In Mr. Trump’s books and TV shows and on the campaign trail, a central item of his self-mythology was that, as he began building his own empire, the only financial help he got from his father was a $1 million loan and that: “I had to pay him back with interest.” Not true.

Mr. Trump built Trump Tower, a Manhattan skyscraper, with his father’s money. That established him as a major builder/player in New York.

In fact, The Times found, Fred Trump lent his son at least $60.7 million, or $140 million in today’s dollars, and the records show, most of it was never repaid. 

·       Fred Trump wove a safety net that rescued his son from one bad bet after another

As the 1980s ended, Donald Trump’s big bets began to go bust.  They included: the Trump Shuttle, the Plaza Hotel, the Atlantic City Casinos. But as he careened from one financial disaster to another, family partnerships and companies dramatically increased their payouts to Trump.  (This is your “Great Deal Maker”.)

Between 1989 and 1992, four of the entities that Fred Trump created paid his son today’s equivalent of $8.3 million. And when Donald Trump pleaded with bankers for an emergency line of credit, he used as collateral the stake his father had given him in a group of apartment buildings.

Tax records also reveal that at the peak of Mr. Trump’s financial distress, in 1990, his father extracted an extraordinary sum, nearly $50 million, from his empire. While The Times could find no evidence that Fred Trump made any significant debt payments, charitable donations or personal expenditures, there are indications that he wanted plenty of cash on hand to bail out his son if need be.

·       The Trumps turned an $11 million loan debt into a legally questionable tax write-off

By 1987, Donald Trump’s loan debt to his father had grown to at least $11 million. Had Fred Trump simply forgiven the debt, his son would have owed millions in income taxes. They instead found another solution, one that appears to constitute both an unreported multimillion-dollar gift and an illegal tax write-off.

That December, records show, Fred Trump spent $15.5 million to buy a 7.5 percent stake in Trump Palace, his son’s condo tower rising on the Upper East Side of Manhattan. Four years later, tax returns and financial statements show, Fred Trump sold that stake for just $10,000. The buyer, other documents indicate, was his son.

According to tax experts, with Trump Palace condos selling briskly, selling shares worth $15.5 million to your son for a mere sliver of that would constitute a multimillion-dollar gift under IRS rules. But Fred Trump’s tax returns show no such gift to Donald Trump. What they do reveal is that he used the transaction to declare an enormous tax write-off. That appears to violate federal tax law that prohibits deducting any loss from the sale or exchange of property between family members.

In all, Fred Trump dodged roughly $8 million in gift taxes and $5 million in income taxes on the transaction.

·       Father and son set out to create the myth of a self-made billionaire

All told, The Times documented 295 distinct streams of revenue Fred Trump created over five decades to channel wealth to his son.

But the partnership between Donald Trump and his father was about more than the pursuit, and the preservation, of riches. They were also confederates in a more ambitious project: creating the myth of Donald J. Trump, Self-Made Billionaire. If Fred Trump was the silent partner, helping finance the accouterments of wealth, it was Donald Trump who spun them into a seductive narrative.  The example of this is Trump Tower, the talisman of privilege that established Donald Trump as a player in New York.  Fred Trump’s money helped build it. His son recognized and exploited its iconic power as the primary stage for both “The Apprentice” and his presidential campaign.

·       Donald Trump tried to change his ailing father’s will, setting off a family feud

In December 1990, Donald Trump sent his father a document that left him both angered and alarmed. It was a codicil seeking to make a variety of changes to Fred Trump’s will. Among them: strengthening provisions that made Donald Trump sole executor of his estate. But amid Mr. Trump’s financial mess, it was the month of the $3.5 million Trump’s Castle rescue,  Fred Trump feared that the document potentially put his life’s work at risk, that his son might use the empire as collateral to save his own failing businesses, according to depositions given years later during a family dispute.

Fred Trump challenged the maneuver, refusing to sign the codicil. But the episode prompted a family feud: Fred Trump was aging and ailing. Without speedy intervention, he could die leaving a vast estate, not just his real estate empire, but also tens of millions of dollars in cash that would be vulnerable to the 55% inheritance tax.

In Mr. Trump’s version of how he got rich, he was the master dealmaker who parlayed a $1 million loan from his father into a $10 billion empire.

So with Donald Trump playing a central role, the family formulated a plan that included unorthodox tax strategies that experts told The Times were legally dubious and, in some cases, appeared to be totally fraudulent.

·       The Trumps created a company that siphoned cash from the empire

The first major component was creating a company called All County Building Supply & Maintenance. On paper, All County was Fred Trump’s purchasing agent, buying everything from boilers to cleaning supplies. But All County was, in fact, a company only on paper, the records and interviews show.  It was a vehicle to siphon cash from Fred Trump’s empire by simply marking up purchases already made by his employees. Those millions in markups, effectively untaxed gifts, then flowed to All County’s owners, which were Donald Trump, his siblings and a cousin.

Lee-Ford Tritt, a leading expert in gift and estate tax law at the University of Florida, said the Trumps’ use of All County was “highly suspicious” and could constitute criminal tax fraud. “It certainly looks like a disguised gift,” he said.

All County also had an insidious downside for Fred Trump’s tenants. He used the padded invoices to justify higher rent increases in rent-regulated buildings, records show.

Mr. Harder, the president’s lawyer, disputed The Times’s reporting: “Should The Times state or imply that President Trump participated in fraud, tax evasion or any other crime, it will be exposing itself to substantial liability and damages for defamation.”

·       The Trump parents dodged hundreds of millions in gift taxes by grossly undervaluing the assets they would pass on

With the cash flowing out of Fred Trump’s empire, the Trumps began transferring ownership of the lion’s share of the empire itself to Donald Trump and his siblings. The vehicle they created to do that was a special kind of trust called a grantor-retained annuity trust, or GRAT.

The purpose of a GRAT is to pass wealth across generations without paying the 55% estate tax. The Trump parents did have to pay gift taxes based on one crucial number: the market value of Fred Trump’s empire. But The Times found evidence that they dodged hundreds of millions of dollars in gift taxes by submitting tax returns that grossly undervalued the assets placed in two GRATs, one for each parent.

Fred Trump’s 1995 gift tax return claimed that the 25 apartment complexes and other properties in the trusts were worth just $41.4 million. The implausibility of this claim would be made plain in 2004, when banks valued that same real estate at nearly $900 million.

“They play around with valuations in extreme ways,” said Mr. Tritt, the tax law expert, who was briefed on The Times’ findings. “There are dramatic fluctuations depending on their purpose.”

Mr. Harder, the president’s lawyer, said: “All estate matters were handled by licensed attorneys, licensed C.P.A.’s and licensed real estate appraisers who followed all laws and rules strictly.”

·       After Fred Trump’s death, his empire’s most valuable asset was an I.O.U. from Donald Trump

When Fred Trump died in June 1999 at the age of 93, the vast bulk of his empire was nowhere to be found in his estate.  That is a testament to the success of the tax strategies devised by the Trumps in the early 1990s. The single largest item included in his estate tax return was a $10.3 million I.O.U. from Donald Trump, money his son appears to have borrowed the year before he died. As for the remnants of empire left in Fred Trump’s estate, the tax return cited appraisals that once again grossly understated their market values.

As their father’s executors, Donald, Maryanne and Robert Trump were legally responsible for the accuracy of his estate tax return. They were obligated not only to give the IRS a complete accounting of the value of his estate’s assets, but also to disclose all the taxable gifts he had made during his lifetime. If they knew anything was wrong and failed to reveal it, tax experts said, they could be in violation of tax law.

Mr. Harder, the president’s lawyer, defended the tax returns filed by the Trumps. “The returns and tax positions that The Times now attacks were examined in real time by the relevant taxing authorities,” he said. “These matters have now been closed for more than a decade.”

·       Donald Trump got a windfall when the empire was sold. But he may have left money on the table.

In 2003, once again in financial trouble, Donald Trump began engineering the sale of the empire Fred Trump had hoped would never leave the family. The sale, completed in 2004, brought him his biggest payday ever from his father: His cut was $177.3 million, or $236.2 million in today’s dollars. But as it turned out, banks at the time valued the empire at hundreds of millions more than the sale price. Donald Trump, master dealmaker, had sold low.

The real issue here is that most likely, Trump’s base will probably say that Trump was being smart to figure out how to not give all that revenue to the government.

The other story that is coming is the real reason for why Donald Trump keeps hitting at the NFL and the team’s owners.  It’s because the owners didn’t want Trump to also be a team owner and they kept him from acquiring an NFL team

Copyright G. Ater  2018